Claims for jobless benefits in the U.S. unexpectedly dropped last week to a five-year low, highlighting the challenges in adjusting the data for swings at the start of a year.
Applications for unemployment insurance payments decreased by 5,000 to 330,000 in the week ended Jan. 19, the fewest since the same week in 2008, the Labor Department reported today in Washington. Economists forecast 355,000 claims, according to the median estimate in a Bloomberg survey.
“The swings are attributable to the calendar,” said Brian Jones, senior U.S. economist at Societe Generale in New York, who projected a drop to 328,000. He said the numbers probably will rise at the end of the month as the calendar returns to normal. “We’re going to pay for this,” he said.
A pickup in consumer spending last month may be helping employers look beyond the rancor in Washington over attempts to cut federal spending and trim the national debt. Nonetheless, an increase in the payroll tax at the start of the year has shaken household confidence, raising the risk that sales may cool.
“Away from the calendar swings, the numbers are getting better,” Jones said. “There’s an improvement in the labor market that is in fact going on."
Stock-index futures held earlier losses after the report. The contract on the Standard & Poor’s 500 Index maturing in March fell 0.1 percent to 1,489 at 8:47 a.m. in New York after Apple Inc. reported the slowest profit growth since 2003 and weakest sales increase in 14 quarters.
Estimates for first-time claims ranged from 310,000 to 380,000 in the Bloomberg survey of 49 economists. The prior week’s figures were unrevised at 335,000.
The swings in claims may reflect challenges adjusting the data during the holiday period and at the start of quarters. This year’s changes are following patterns seen in prior years, a Labor Department spokesman said as the data were released to the press. In 2008, claims dropped for consecutive weeks in early January and then rebounded at the end of the month.
The number of applications was estimated for California, Virginia and Hawaii because of the holiday-shortened week, the Labor Department spokesman also said.
The number of people who continue to collect jobless benefits fell by 71,000 to 3.16 million in the week ended Jan. 12, the fewest since July 2008. The continuing claims figure does not include workers receiving extended benefits from the federal government.
Those who’ve exhausted their traditional benefits and now are collecting emergency and extended payments decreased by 365,600 to 1.69 million in the week ended Jan. 5. These figures may also be distorted because of the holidays, the Labor Department spokesman said.
The unemployment rate among people eligible for benefits held at 2.5 percent in the week ended Jan. 12. Thirty-two states and territories reported an increase in claims and 21 reported a decrease.
Initial jobless claims reflect weekly firings and tend to fall as job growth accelerates.
Job creation held steady last month. The 155,000 workers added to payrolls was in line with the year’s average monthly growth rate of 153,000 jobs, the Labor Department reported earlier this month. Unemployment fell to 7.8 percent at the end of 2012 from 8.3 percent at the start of the year.
The labor market may face a hurdle from higher payroll taxes that took effect this month. As part of a budget agreement, Congress agreed to let the tax that funds Social Security return to its 2010 level of 6.2 percent from 4.2 percent. A person earning $50,000 would see about an $83-a-month reduction in their paycheck as a result.
Banks and financial services firms are among companies paring their workforces. American Express Co. said it will cut 5,400 U.S. jobs this year, about 8.5 percent of its workforce. Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank, is also reducing its U.S. payroll and Morgan Stanley last week said it would slash 1,600 jobs from its investment bank and support staff.
“We’re being aggressive with our cost base,” Morgan Stanley Chairman and Chief Executive Officer James P. Gorman said on a Jan. 18 earnings call. “We live in a world of continued regulatory uncertainty.”